Tuesday, July 10, 2012

Q2 Earnings Season, Weeks 1 and 2

I can't believe its that time of the year again! Time seems to really fly when you start investing.

Alcoa already led off with a decent report this afternoon. Besides the headline numbers (beat on both EPS and revenues), I was encouraged by the comments made by CEO Klaus Kleinfeld about both outlook, and where the demand is coming from. He reiterated both the 7% global aluminum demand growth projections for 2012, as well as the continuance of demand from the aerospace boom. Mr Kleinfeld also noted that inventories were coming down, and price increases are expected to follow.

I believe his comments signal good times ahead for aerospace firms like Boeing, Honeywell, General Electric, United Technologies, etc. I'm expecting them to all beat, especially after the sell off and guidance reductions recently.

Here's a look at the major earnings reports for the next 2 weeks.

Even though Alcoa kicked off earnings season on Monday, the big reports don't really begin until this Friday.

Friday July 13 (uhoh unlucky? hehe)

  • on Friday we get 2 financial powerhouses, JPMorgan, and Wells Fargo
  • focus on quality instead of headlines. we dont want to see beats due to decreased loan loss reserves.
  • JPM is of particular interest this quarter due to the London Whale fiasco. look for trading losses 5B or under to be a positive. more would be bad

Monday July 16
  • Monday morning we get another financial powerhouse, Citigroup
  • focus on similar things as JPM and WFC, plus any insights into 2013 capital plan, and its dividend
  • Johnson Controls also reports. the stock has sold off hard into earnings, and bad news could be already priced in.
Tuesday July 17
  • The meat of earnings always starts the 2nd Tuesday after Alcoa, and is no different this time
  • we'll have J&J, Goldman Sachs, and Coke in the morning, CSX, Intel in the afternoon
  • I'm particularly interested in CSX, and I want to see steady growth in rail volume. I'm also interested in listening to how much lower fuel prices this quarter have affected earnings
  • Intel is also interest given AMD just pre-announced to the downside today. I think this could be a possible share take here, as the Intel brand is stronger in Asia, where AMD reported weakness.
Wednesday July 18
  • the slew of reports continues with Bank of America, Abbott Labs, Honeywell, in the morning, and American Express, IBM, and Yum Brands after the bell
  • I will be focused on Abbott Labs, as I want to hear more about their break up plans
  • Yum Brands is also of particular interest to me, as even though NA investors tout them as a good China play, my recent trip to China indicated KFC and Pizza Hut losing significant clout among Chinese locals
  • I also want to see stable results out of American Express, to tell us our consumers haven't fallen off the cliff.
Thursday July 19
  • while there are many reports on Thursday as well, the main ones that stick out at me are Microsoft, Verizon, and Union Pacific
  • Microsoft because of their recent good will write down, Verizon because I'm interested in seeing how much people are really replacing laptops with tablets. Union Pacific because it is a west coast version of CSX
Friday July 20
  • on Friday we start shifting into energy earnings, with Baker Hughes, Schlumberger reporting, and also General Electric
  • I'm very curious how much the slide in crude prices have affected Baker Hughes and SLB. That being said, SLB is a very attractive long term investment in the low 60s, and I could be tempted to buy some if it sells off before or after they report. 

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